Bill Text: IL HB3026 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Historic Preservation Tax Credit Act. Provides that the aggregate amount of credits awarded under the Act to a particular taxpayer may not exceed $3,000,000. Provides that the total amount of expenditures must equal at least $5,000 and (currently, "or") exceed the adjusted basis of the structure. Provides that the taxpayer may not receive a credit under the Act and a River Edge redevelopment credit for the same qualified expenditures or rehabilitation plan. Makes changes concerning the allocation of credits. Makes various technical changes. Amends the Illinois Income Tax Act. Makes changes to the historic preservation credit to include limited liability companies. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2019-03-29 - House Committee Amendment No. 1 Rule 19(c) / Re-referred to Rules Committee [HB3026 Detail]

Download: Illinois-2019-HB3026-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB3026 Introduced , by Rep. Jehan Gordon-Booth SYNOPSIS AS INTRODUCED:
35 ILCS 5/228
35 ILCS 31/5
35 ILCS 31/10
35 ILCS 31/20
Amends the Historic Preservation Tax Credit Act. Provides that the aggregate amount of credits awarded under the Act to a particular taxpayer may not exceed $3,000,000. Provides that the total amount of expenditures must equal at least $5,000 and (currently, "or") exceed the adjusted basis of the structure. Provides that the taxpayer may not receive a credit under the Act and a River Edge redevelopment credit for the same qualified expenditures or rehabilitation plan. Makes changes concerning the allocation of credits. Makes various technical changes. Amends the Illinois Income Tax Act. Makes changes to the historic preservation credit to include limited liability companies. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
HB3026 LRB101 10296 HLH 55401 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
renumbering and changing Section 228, as added by Public Act
100-629, as follows:
(35 ILCS 5/228)
Sec. 228 227. Historic preservation credit. For tax years
beginning on or after January 1, 2019 and ending on or before
December 31, 2023, a taxpayer who qualifies for a credit under
the Historic Preservation Tax Credit Act is entitled to a
credit against the taxes imposed under subsections (a) and (b)
of Section 201 of this Act as provided in that Act. If the
taxpayer is a partnership, or Subchapter S corporation, or a
limited liability company, 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, provided
that credits granted to a 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

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documenting any alternate distribution method. If the amount of
any tax credit awarded under this Section exceeds the qualified
taxpayer's income tax liability for the year in which the
qualified rehabilitation plan was placed in service, the excess
amount may be carried forward as provided in the Historic
Preservation Tax Credit Act.
(Source: P.A. 100-629, eff. 1-1-19; revised 10-9-18.)
Section 10. The Historic Preservation Tax Credit Act is
amended by changing Sections 5, 10, and 20 as follows:
(35 ILCS 31/5)
Sec. 5. Definitions. As used in this Act, unless the
context clearly indicates otherwise:
"Director" means the Director of Natural Resources or his
or her designee.
"Division" means the State Historic Preservation Office
within the Department of Natural Resources.
"Phased rehabilitation" means a project that is completed
in phases, as defined under Section 47 of the federal Internal
Revenue Code and pursuant to National Park Service regulations
at 36 C.F.R. 67.
"Placed in service" means the date when the property is
placed in a condition or state of readiness and availability
for a specifically assigned function as defined under Section
47 of the federal Internal Revenue Code and federal Treasury

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Regulation Sections 1.46 and 1.48.
"Qualified expenditures" means all the costs and expenses
defined as qualified rehabilitation expenditures under Section
47 of the federal Internal Revenue Code that were incurred in
connection with a qualified rehabilitation plan historic
structure.
"Qualified historic structure" means any structure that is
located in Illinois and is defined as a certified historic
structure under Section 47(c)(3) of the federal Internal
Revenue Code.
"Qualified rehabilitation plan" means a project that is
approved by the Department of Natural Resources and the
National Park Service as being consistent with the United
States Secretary of the Interior's Standards for
Rehabilitation.
"Qualified taxpayer" means the owner of the qualified
historic structure or any other person or entity who may
qualify for the federal rehabilitation credit allowed by
Section 47 of the federal Internal Revenue Code.
"Recapture event" means any of the following events
occurring during the recapture period:
(1) failure to place in service the rehabilitated
portions of the qualified historic structure, or failure to
maintain the rehabilitated portions of the qualified
historic structure in service after they are placed in
service; provided that a recapture event under this

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paragraph (1) shall not include a removal from service for
a reasonable period of time to conduct maintenance and
repairs that are reasonably necessary to protect the health
and safety of the public or to protect the structural
integrity of the qualified historic structure or a
neighboring structure;
(2) demolition or other alteration of the qualified
historic structure in a manner that is inconsistent with
the qualified rehabilitation plan or the Secretary of the
Interior's Standards for Rehabilitation;
(3) disposition of the rehabilitated qualified
historic structure in whole or a proportional disposition
of a partnership interest therein, except as otherwise
permitted by this Section; or
(4) use of the qualified historic structure in a manner
that is inconsistent with the qualified rehabilitation
plan or that is otherwise inconsistent with the provisions
and intent of this Section.
A recapture event occurring in one taxable year shall be
deemed continuing to subsequent taxable years unless and until
corrected.
The following dispositions of a qualified historic
structure shall not be deemed to be a recapture event for
purposes of this Section:
(1) a transfer by reason of death;
(2) a transfer between spouses incident to divorce;

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(3) a sale by and leaseback to an entity that, when the
rehabilitated portions of the qualified historic structure
are placed in service, will be a lessee of the qualified
historic structure, but only for so long as the entity
continues to be a lessee; and
(4) a mere change in the form of conducting the trade
or business by the owner (or, if applicable, the lessee) of
the qualified historic structure, so long as the property
interest in such qualified historic structure is retained
in such trade or business and the owner or lessee retains a
substantial interest in such trade or business.
"Recapture period" means the 5-year period beginning on the
date that the qualified historic structure or rehabilitated
portions of the qualified historic structure are placed in
service.
"Substantial rehabilitation" means that the qualified
rehabilitation expenditures during the 24-month period
selected by the taxpayer at the time and in the manner
prescribed by rule and ending with or within the taxable year
exceed the greater of (i) the adjusted basis of the building
and its structural components or (ii) $5,000. The adjusted
basis of the building and its structural components shall be
determined as of the beginning of the first day of such
24-month period or as of the beginning of the first day of the
holding period of the building, whichever is later. For
purposes of determining the adjusted basis, the determination

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of the beginning of the holding period shall be made without
regard to any reconstruction by the taxpayer in connection with
the rehabilitation. In the case of any phased rehabilitation,
with phases set forth in architectural plans and specifications
completed before the rehabilitation begins, this definition
shall be applied by substituting "60-month period" for
"24-month period" wherever that term occurs in the definition.
(Source: P.A. 100-629, eff. 1-1-19.)
(35 ILCS 31/10)
Sec. 10. Allowable credit.
(a) To the extent authorized by this Act, for taxable years
beginning on or after January 1, 2019 and ending on or before
December 31, 2023, there shall be allowed a tax credit to the
qualified taxpayer against the tax imposed by subsections (a)
and (b) of Section 201 of the Illinois Income Tax Act in an
aggregate amount equal to the lesser of (i) 25% of qualified
expenditures incurred in by a qualified taxpayer undertaking a
qualified rehabilitation plan or (ii) $3,000,000 of a qualified
historic structure, provided that the total amount of such
expenditures must (i) equal $5,000 or more and or (ii) exceed
the adjusted basis of the qualified historic structure on the
first day the qualified rehabilitation plan commenced. If the
qualified rehabilitation plan spans multiple years, the
aggregate credit for the entire project shall be allowed in the
last taxable year.

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(b) To obtain a tax credit certificate pursuant to this
Section, the qualified taxpayer must apply with the Division.
The Division shall determine the amount of eligible
rehabilitation expenditures within 45 days after receipt of a
complete application. The taxpayer must provide to the Division
a third-party cost certification conducted by a certified
public accountant verifying (i) the qualified and
non-qualified rehabilitation expenses and (ii) that the
qualified expenditures exceed the adjusted basis of the
qualified historic structure on the first day the qualified
rehabilitation plan commenced. The accountant shall provide
appropriate review and testing of invoices. The Division is
authorized, but not required, to accept this third-party cost
certification to determine the amount of qualified
expenditures. The Division and the National Park Service shall
determine whether the rehabilitation is consistent with the
Standards of the Secretary of the United States Department of
the Interior.
(c) If the amount of any tax credit awarded under this Act
exceeds the qualified taxpayer's income tax liability for the
year in which the qualified rehabilitation plan was placed in
service, the excess amount may be carried forward for deduction
from the taxpayer's income tax liability in the next succeeding
year or years until the total amount of the credit has been
used, except that a credit may not be carried forward for
deduction after the tenth taxable year after the taxable year

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in which the qualified rehabilitation plan was placed in
service. Upon completion and review of the project and approval
of the complete application, the Division shall issue a single
certificate in the amount of the eligible credits equal to 25%
of the qualified expenditures incurred during the eligible
taxable years, not to exceed the lesser of the allocated amount
or $3,000,000 per single qualified rehabilitation plan. Prior
to the issuance of the tax credit certificate, the qualified
taxpayer must provide to the Division verification that the
rehabilitated structure is a qualified historic structure. At
the time the certificate is issued, an issuance fee up to the
maximum amount of 2% of the amount of the credits issued by the
certificate may be collected from the qualified taxpayer
applicant to administer the Act. If collected, this issuance
fee shall be directed to the Division Historic Property
Administrative Fund or other such fund as appropriate for use
of the Division in the administration of the Historic
Preservation Tax Credit Program. The taxpayer must attach the
certificate or legal documentation of her or his proportional
share of the certificate to the tax return on which the credits
are to be claimed. The tax credit under this Section may not
reduce the taxpayer's liability to less than zero. If the
amount of the credit exceeds the tax liability for the year,
the excess credit may be carried forward and applied to the tax
liability of the 10 taxable years following the first excess
credit year. The taxpayer may not receive credits under this

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Section and Section 221 of the Illinois Income Tax Act for the
same qualified expenditures or qualified rehabilitation plan.
(d) If the taxpayer is (i) a corporation having an election
in effect under Subchapter S of the federal Internal Revenue
Code, (ii) a partnership, or (iii) a limited liability company,
the credit provided under 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, 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.
(e) If a recapture event occurs during the recapture period
with respect to a qualified historic structure, then for any
taxable year in which the credits are allowed as specified in
this Act, the tax under the applicable Section of this Act
shall be increased by applying the recapture percentage set
forth below to the tax decrease resulting from the allocation
application of credits allowed under this Act to the taxable

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year in question.
For the purposes of this subsection, the recapture
percentage shall be determined as follows:
(1) if the recapture event occurs within the first year
after commencement of the recapture period, then the
recapture percentage is 100%;
(2) if the recapture event occurs within the second
year after commencement of the recapture period, then the
recapture percentage is 80%;
(3) if the recapture event occurs within the third year
after commencement of the recapture period, then the
recapture percentage is 60%;
(4) if the recapture event occurs within the fourth
year after commencement of the recapture period, then the
recapture percentage is 40%; and
(5) if the recapture event occurs within the fifth year
after commencement of the recapture period, then the
recapture percentage is 20%.
In the case of any recapture event, the carryforwards under
this Act shall be adjusted by reason of such event.
(f) (d) The Division may adopt rules to implement this
Section in addition to the rules expressly authorized herein.
(Source: P.A. 100-629, eff. 1-1-19; revised 10-1-18.)
(35 ILCS 31/20)
Sec. 20. Limitations, reporting, and monitoring.

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(a) In every calendar year that this program is in effect,
the Division is authorized to allocate $15,000,000 worth of tax
credits in addition to any unallocated, returned, or rescinded
allocations from previous years, pursuant to qualified
rehabilitation plans. The Division shall award not more than an
aggregate of $15,000,000 in total annual tax credits pursuant
to qualified rehabilitation plans for qualified historic
structures. The Division shall allocate and award not more than
$3,000,000 in tax credits with regard to a single qualified
rehabilitation plan. In allocating awarding tax credits under
this Act, the Division must prioritize applications projects
that meet one or more of the following:
(1) the qualified historic structure is located in a
county that borders a State with a historic
income-producing property rehabilitation credit;
(2) the qualified historic structure was previously
owned by a federal, state, or local governmental entity for
no less than 6 months;
(3) the qualified historic structure is located in a
census tract that has a median family income at or below
the State median family income; data from the most recent
5-year estimate from the American Community Survey (ACS),
published by the U.S. Census Bureau, shall be used to
determine eligibility;
(4) the qualified rehabilitation plan includes in the
development partnership a Community Development Entity or

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a low-profit (B Corporation) or not-for-profit
organization, as defined by Section 501(c)(3) of the
Internal Revenue Code; or
(5) the qualified historic structure is located in an
area declared under an Emergency Declaration or Major
Disaster Declaration under the federal Robert T. Stafford
Disaster Relief and Emergency Assistance Act. The
declaration must be no older than 3 years old at the time
of application.
(b) The annual aggregate authorization program allocation
of $15,000,000 set forth in subsection (a) shall be allocated
by the Division, in such proportion as determined by the
Director Department, on a per calendar basis twice in each year
that the program is in effect, provided that: (i) the amount
initially allocated by the Division for the first any one
calendar year application period shall not exceed 65% of the
total allowable amount available for allocation. Any
unallocated and (ii) any portion of the allocated allowable
amount remaining unused as of the end of any of the second
calendar application period of a given calendar year shall be
rolled over into and added to the total authorized allocated
amount for the next available calendar year. The qualified
rehabilitation plan must meet a readiness test, as defined in
the rules created by the Division, in order for the application
Applicant to qualify. In any given application period,
applications Applicants that qualify under this Act and are

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prioritized as set forth in subsection (a) will be placed in a
queue based on the date and time the application is received
until such time as the application period total allowable
amount is reached. Applications that qualify but do not receive
an allocation Applicants must reapply to be considered in
subsequent for each application periods period.
(c) Subject On or before December 31, 2019, and on or
before December 31 of each odd-numbered year thereafter through
2023, subject to appropriation and prior to equal disbursement
to the Division, moneys in the Historic Property Administrative
Fund shall be used, on a biennial basis beginning at the end of
the second first fiscal year after the effective date of this
Act, to hire a qualified third party to prepare a biennial
report to assess the overall impact effectiveness of this Act
from the qualified rehabilitation plans projects under this Act
completed in that year and in previous years. Baseline data of
the metrics in the report shall be collected at the initiation
of a qualified rehabilitation plan project. The overall
economic impact shall include at least:
(1) the number of applications, project locations, and
proposed use of qualified historic structures;
(2) the amount of credits awarded and the number and
location of projects receiving credit allocations;
(3) the status of ongoing projects and projected
qualifying expenditures for ongoing projects;
(4) for completed projects, the total amount of

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qualifying rehabilitation expenditures and non-qualifying
expenditures, the number of housing units created and the
number of housing units that qualify as affordable, and the
total square footage rehabilitated and developed;
(5) direct, indirect, and induced economic impacts;
(6) temporary, permanent, and construction jobs
created; and
(7) sales, income, and property tax generation before
construction, during construction, and after completion.
The report to the General Assembly shall be filed with the
Clerk of the House of Representatives and the Secretary of the
Senate in electronic form only, in the manner that the Clerk
and the Secretary shall direct.
(d) Any time prior to issuance of a tax credit certificate,
the Director of the Division, the State Historic Preservation
Officer, or staff of the Division may, upon reasonable notice
to the project owner of not less than 3 business days, conduct
a site visit to the project to inspect and evaluate the
project.
(e) Any time prior to the issuance of a tax credit
certificate and for a period of 4 years following the effective
date of a project tax credit certificate, the Director may,
upon reasonable notice of not less than 30 calendar days,
request a status report from the Applicant consisting of
information and updates relevant to the status of the project.
Status reports shall not be requested more than twice yearly.

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(f) In order to demonstrate sufficient evidence of
reviewable progress within 12 months after the date the
Applicant received notification of allocation approval from
the Division, the Director may require the Applicant to shall
provide all of the following:
(1) a viable financial plan which demonstrates by way
of an executed agreement that all financing has been
secured for the project; such financing shall include, but
not be limited to, equity investment as demonstrated by
letters of commitment from the owner of the property,
investment partners, and equity investors;
(2) (blank); final construction drawings or approved
building permits that demonstrate the complete
rehabilitation of the full scope of the application; and
(3) all historic approvals, including all federal and
State rehabilitation documents required by the Division.
The Director shall review the submitted evidence and may
request additional documentation from the Applicant if
necessary. The Applicant will have 30 calendar days to provide
the information requested, otherwise the allocation approval
may be rescinded at the discretion of the Director.
(g) In order to demonstrate sufficient evidence of
reviewable progress within 24 18 months after the date the
application received notification of approval from the
Division, the Director may require the Applicant is required to
provide detailed evidence that the Applicant has secured and

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closed on financing for the complete scope of rehabilitation
for the project. To demonstrate evidence that the Applicant has
secured and closed on financing, the Applicant will need to
provide signed and processed loan agreements, bank financing
documents or other legal and contractual evidence to
demonstrate that adequate financing is available to complete
the project. The Director shall review the submitted evidence
and may request additional documentation from the Applicant if
necessary. The Applicant will have 30 calendar days to provide
the information requested, otherwise the allocation approval
may be rescinded at the discretion of the Director.
If the Applicant fails to document reviewable progress
within 24 18 months of approval, the Director may notify the
Applicant that the allocation application is rescinded.
However, should financing and construction be imminent, the
Director may elect to grant the Applicant no more than 5 months
to close on financing and commence construction. If the
Applicant fails to meet these conditions in the required
timeframe, the Director shall notify the Applicant that the
allocation application is rescinded. Any such rescinded
allocation shall be added to the aggregate amount of credits
available for allocation for the year in which the forfeiture
occurred.
The amount of the qualified expenditures identified in the
qualified taxpayer's Applicant's certification of completion
and reflected on the Historic Preservation Tax Credit

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certificate issued by the Director is subject to inspection,
examination, and audit by the Department of Revenue.
The qualified taxpayer Applicant shall establish and
maintain for a period of 4 years following the effective date
on a project tax credit certificate such records as required by
the Director. Such records include, but are not limited to,
records documenting project expenditures and compliance with
the U.S. Secretary of the Interior's Standards. The qualified
taxpayer Applicant shall make such records available for review
and verification by the Director, the State Historic
Preservation Officer, the Department of Revenue, or
appropriate staff, as well as other appropriate State agencies.
In the event the Director determines an Applicant has submitted
a status an annual report containing erroneous information or
data not supported by records established and maintained under
this Act, the Director may, after providing notice, require the
Applicant to resubmit corrected reports.
(Source: P.A. 100-629, eff. 1-1-19.)
Section 99. Effective date. This Act takes effect upon
becoming law.