Bill Text: IL SB0119 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Historic Preservation Tax Credit Act. Extends the sunset of the credit to December 31, 2028 (currently, December 31, 2023). Provides that, in each calendar year beginning on or after January 1, 2024 and ending on or before December 31, 2028, the State Historic Preservation Office in the Department of Natural Resources is authorized to allocate $75,000,000 (currently, $15,000,000) in tax credits under the Act. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced) 2023-03-21 - Added as Co-Sponsor Sen. Mattie Hunter [SB0119 Detail]

Download: Illinois-2023-SB0119-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0119 Introduced 1/24/2023, by Sen. Steve Stadelman SYNOPSIS AS INTRODUCED:
35 ILCS 5/228
35 ILCS 31/10
35 ILCS 31/20
Amends the Historic Preservation Tax Credit Act. Extends the sunset of the credit to December 31, 2028 (currently, December 31, 2023). Provides that, in each calendar year beginning on or after January 1, 2024 and ending on or before December 31, 2028, the State Historic Preservation Office in the Department of Natural Resources is authorized to allocate $75,000,000 (currently, $15,000,000) in tax credits under the Act. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.
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A BILL FOR
SB0119 LRB103 06051 HLH 51081 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
changing Section 228 as follows:
(35 ILCS 5/228)
Sec. 228. Historic preservation credit. For tax years
beginning on or after January 1, 2019 and ending on or before
December 31, 2028 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, Subchapter S
corporation, or a limited liability company the credit shall
be allowed to the partners, shareholders, or members 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 documenting

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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. 101-81, eff. 7-12-19; 102-741, eff. 5-6-22.)
Section 10. The Historic Preservation Tax Credit Act is
amended by changing Sections 10 and 20 as follows:
(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, 2028 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 25% of
qualified expenditures, but not to exceed $3,000,000, incurred
undertaking a qualified rehabilitation plan, provided that the
total amount of such expenditures must (i) equal $5,000 or
more and (ii) exceed the adjusted basis of the 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

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the last taxable year.
(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
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

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year in which the qualified rehabilitation plan was placed in
service. Upon completion 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 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 is not eligible to receive credits

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under this Section and under 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

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the application of credits allowed under this Act to the
taxable 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) The Division may adopt rules to implement this Section
in addition to the rules expressly authorized herein.
(Source: P.A. 101-81, eff. 7-12-19; 102-741, eff. 5-6-22.)
(35 ILCS 31/20)

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Sec. 20. Limitations, reporting, and monitoring.
(a) In each every calendar year beginning on or after
January 1, 2019 and ending on or before December 31, 2023 that
this program is in effect, the Division is authorized to
allocate $15,000,000 in tax credits in addition to any
unallocated, returned, or rescinded allocations from previous
years, pursuant to qualified rehabilitation plans. In each
calendar year beginning on or after January 1, 2024 and ending
on or before December 31, 2028, the Division is authorized to
allocate $75,000,000 in tax credits in addition to any
unallocated, returned, or rescinded allocations from previous
years, pursuant to qualified rehabilitation plans. The
Division shall not allocate or award more than $3,000,000 in
tax credits with regard to a single qualified rehabilitation
plan. In allocating tax credits under this Act, the Division
must prioritize applications that meet one or more of the
following:
(1) the structure is located in a county that borders
a State with a historic income-producing property
rehabilitation credit;
(2) the structure was previously owned by a federal,
state, or local governmental entity for no less than 6
months;
(3) the 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

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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
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 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 at the time of application.
(b) The annual aggregate authorization of $15,000,000 set
forth in subsection (a) shall be allocated by the Division, in
such proportion as determined by the Director twice in each
calendar year that the program is in effect, provided that the
amount initially allocated by the Division for the first
calendar year application period shall not exceed 65% of the
total amount available for allocation. Any unallocated amount
remaining as of the end of the second application period of a
given calendar year shall be rolled over and added to the total
authorized amount for the next available calendar year. The
qualified rehabilitation plan must meet a readiness test, as
defined by the Division, in order for the application to
qualify. In any given application period, applications that

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qualify under this Act will be prioritized as set forth in
subsection (a) and placed in a queue based on the date and time
the application is received. Applicants whose applications
qualify but do not receive an allocation must reapply to be
considered in subsequent application periods.
(c) Subject to appropriation to the Division, moneys in
the Historic Property Administrative Fund shall be used, on a
biennial basis, beginning at the end of the second 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 of this Act from the qualified rehabilitation plans
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. 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
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;

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(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 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, 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.
(f) In order to demonstrate sufficient evidence of
reviewable progress within 12 months after the date the
Applicant received notification of allocation from the
Division, the Director may require the Applicant to provide
all of the following:
(1) a viable financial plan which demonstrates by way

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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); 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 may be
rescinded at the discretion of the Director.
(g) In order to demonstrate sufficient evidence of
reviewable progress within 24 months after the date the
application received notification of approval from the
Division, the Director may require the Applicant to provide
detailed evidence that the Applicant has secured and 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

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necessary. The Applicant will have 30 calendar days to provide
the information requested, otherwise the allocation may be
rescinded at the discretion of the Director.
If the Applicant fails to document reviewable progress
within 24 months of approval, the Director may notify the
Applicant that the allocation 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 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 certification of completion and reflected
on the Historic Preservation Tax Credit certificate issued by
the Director is subject to inspection, examination, and audit
by the Department of Revenue.
The qualified taxpayer 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
shall make such records available for review and verification

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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 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. 102-741, eff. 5-6-22.)
Section 99. Effective date. This Act takes effect upon
becoming law.