102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB1711
 
Introduced 2/26/2021, by Sen. Cristina Castro
 
SYNOPSIS AS INTRODUCED:



35 ILCS 31/5
35 ILCS 31/10
35 ILCS 31/20
35 ILCS 31/25
35 ILCS 5/228

 Amends the Historic Preservation Tax Credit Act. Provides that the aggregate amount of the credit may not exceed $3,000,000. Provides that credits may be awarded upon completion of the project and approval of a complete application (currently, review of the project). Provides that the taxpayer is not eligible to receive credits under that Act and as qualified River Edge Redevelopment Zone property for the same qualified expenditures or qualified rehabilitation plan. Makes various technical corrections concerning allocation of credits. Amends the Illinois Income Tax Act with respect to the Historic Preservation Tax Credit to include provisions concerning limited liability companies. Effective immediately.



LRB102 11477 HLH 16811 b


FISCAL NOTE ACT MAY APPLY
 
 
A BILL FOR
 


SB1711LRB102 11477 HLH 16811 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 5. The Historic Preservation Tax Credit Act is 
5amended by changing Sections 5, 10, 20, and 25 as follows:

6 (35 ILCS 31/5)

7 Sec. 5. Definitions. As used in this Act, unless the 
8context clearly indicates otherwise:
9 "Director" means the Director of Natural Resources or his 
10or her designee. 
11 "Division" means the State Historic Preservation Office 
12within the Department of Natural Resources.
13 "Phased rehabilitation" means a project that is completed 
14in phases, as defined under Section 47 of the federal Internal 
15Revenue Code and pursuant to National Park Service regulations 
16at 36 C.F.R. 67.
17 "Placed in service" means the date when the property is 
18placed in a condition or state of readiness and availability 
19for a specifically assigned function as defined under Section 
2047 of the federal Internal Revenue Code and federal Treasury 
21Regulation Sections 1.46 and 1.48.
22 "Qualified expenditures" means all the costs and expenses 
23defined as qualified rehabilitation expenditures under Section 
 
 
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147 of the federal Internal Revenue Code that were incurred in 
2connection with a qualified rehabilitation plan historic 
3structure.
4 "Qualified historic structure" means any structure that is 
5located in Illinois and is defined as a certified historic 
6structure under Section 47(c)(3) of the federal Internal 
7Revenue Code.
8 "Qualified rehabilitation plan" means a project that is 
9approved by the Department of Natural Resources and the 
10National Park Service as being consistent with the United 
11States Secretary of the Interior's Standards for 
12Rehabilitation.
13 "Qualified taxpayer" means the owner of the qualified 
14historic structure or any other person or entity who may 
15qualify for the federal rehabilitation credit allowed by 
16Section 47 of the federal Internal Revenue Code.
17 "Recapture event" means any of the following events 
18occurring during the recapture period:
19  (1) failure to place in service the rehabilitated 
20 portions of the qualified historic structure, or failure 
21 to maintain the rehabilitated portions of the qualified 
22 historic structure in service after they are placed in 
23 service; provided that a recapture event under this 
24 paragraph (1) shall not include a removal from service for 
25 a reasonable period of time to conduct maintenance and 
26 repairs that are reasonably necessary to protect the 
 
 
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1 health and safety of the public or to protect the 
2 structural integrity of the qualified historic structure 
3 or a neighboring structure;
4  (2) demolition or other alteration of the qualified 
5 historic structure in a manner that is inconsistent with 
6 the qualified rehabilitation plan or the Secretary of the 
7 Interior's Standards for Rehabilitation; 
8  (3) disposition of the rehabilitated qualified 
9 historic structure in whole or a proportional disposition 
10 of a partnership interest therein, except as otherwise 
11 permitted by this Section; or 
12  (4) use of the qualified historic structure in a 
13 manner that is inconsistent with the qualified 
14 rehabilitation plan or that is otherwise inconsistent with 
15 the provisions and intent of this Section.
16 A recapture event occurring in one taxable year shall be 
17deemed continuing to subsequent taxable years unless and until 
18corrected. 
19 The following dispositions of a qualified historic 
20structure shall not be deemed to be a recapture event for 
21purposes of this Section:
22  (1) a transfer by reason of death;
23  (2) a transfer between spouses incident to divorce;
24  (3) a sale by and leaseback to an entity that, when the 
25 rehabilitated portions of the qualified historic structure 
26 are placed in service, will be a lessee of the qualified 
 
 
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1 historic structure, but only for so long as the entity 
2 continues to be a lessee; and 
3  (4) a mere change in the form of conducting the trade 
4 or business by the owner (or, if applicable, the lessee) 
5 of the qualified historic structure, so long as the 
6 property interest in such qualified historic structure is 
7 retained in such trade or business and the owner or lessee 
8 retains a substantial interest in such trade or business.
9 "Recapture period" means the 5-year period beginning on 
10the date that the qualified historic structure or 
11rehabilitated portions of the qualified historic structure are 
12placed in service.
13 "Substantial rehabilitation" means that the qualified 
14rehabilitation expenditures during the 24-month period 
15selected by the taxpayer at the time and in the manner 
16prescribed by rule and ending with or within the taxable year 
17exceed the greater of (i) the adjusted basis of the building 
18and its structural components or (ii) $5,000. The adjusted 
19basis of the building and its structural components shall be 
20determined as of the beginning of the first day of such 
2124-month period or as of the beginning of the first day of the 
22holding period of the building, whichever is later. For 
23purposes of determining the adjusted basis, the determination 
24of the beginning of the holding period shall be made without 
25regard to any reconstruction by the taxpayer in connection 
26with the rehabilitation. In the case of any phased 
 
 
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1rehabilitation, with phases set forth in architectural plans 
2and specifications completed before the rehabilitation begins, 
3this definition shall be applied by substituting "60-month 
4period" for "24-month period" wherever that term occurs in the 
5definition.

6(Source: P.A. 100-629, eff. 1-1-19.)

7 (35 ILCS 31/10)

8 Sec. 10. Allowable credit. 
9 (a) To the extent authorized by this Act, for taxable 
10years beginning on or after January 1, 2019 and ending on or 
11before December 31, 2023, there shall be allowed a tax credit 
12to the qualified taxpayer against the tax imposed by 
13subsections (a) and (b) of Section 201 of the Illinois Income 
14Tax Act in an aggregate amount equal to 25% of qualified 
15expenditures, but not to exceed $3,000,000, incurred by a 
16qualified taxpayer undertaking a qualified rehabilitation plan 
17of a qualified historic structure, provided that the total 
18amount of such expenditures must (i) equal $5,000 or more or 
19(ii) exceed the adjusted basis of the qualified historic 
20structure on the first day the qualified rehabilitation plan 
21commenced. If the qualified rehabilitation plan spans multiple 
22years, the aggregate credit for the entire project shall be 
23allowed in the last taxable year.
24 (b) To obtain a tax credit certificate pursuant to this 
25Section, the qualified taxpayer must apply with the Division. 
 
 
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1The Division shall determine the amount of eligible 
2rehabilitation expenditures within 45 days after receipt of a 
3complete application. The taxpayer must provide to the 
4Division a third-party cost certification conducted by a 
5certified public accountant verifying (i) the qualified and 
6non-qualified rehabilitation expenses and (ii) that the 
7qualified expenditures exceed the adjusted basis of the 
8qualified historic structure on the first day the qualified 
9rehabilitation plan commenced. The accountant shall provide 
10appropriate review and testing of invoices. The Division is 
11authorized, but not required, to accept this third-party cost 
12certification to determine the amount of qualified 
13expenditures. The Division and the National Park Service shall 
14determine whether the rehabilitation is consistent with the 
15Standards of the Secretary of the United States Department of 
16the Interior.
17 (c) If the amount of any tax credit awarded under this Act 
18exceeds the qualified taxpayer's income tax liability for the 
19year in which the qualified rehabilitation plan was placed in 
20service, the excess amount may be carried forward for 
21deduction from the taxpayer's income tax liability in the next 
22succeeding year or years until the total amount of the credit 
23has been used, except that a credit may not be carried forward 
24for deduction after the tenth taxable year after the taxable 
25year in which the qualified rehabilitation plan was placed in 
26service. Upon completion of the project and approval of the 
 
 
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1complete application review of the project, the Division shall 
2issue a single certificate in the amount of the
eligible 
3credits equal to 25% of the qualified expenditures incurred 
4during the eligible taxable years, not to exceed the lesser of 
5the allocated amount or $3,000,000 per single qualified 
6rehabilitation plan. Prior to the issuance of the tax credit 
7certificate, the qualified taxpayer must provide to the 
8Division verification that the rehabilitated structure is a 
9qualified historic structure.. At the time the certificate is 
10issued, an issuance fee up to the maximum amount of 2% of the 
11amount of the credits issued by the certificate may be 
12collected from the qualified taxpayer applicant to administer 
13the Act. If collected, this issuance fee shall be directed to 
14the Division Historic Property Administrative Fund or other 
15such fund as appropriate for use of the Division in the 
16administration of the Historic Preservation Tax Credit 
17Program. The taxpayer must attach the certificate or legal 
18documentation of her or his proportional share of the 
19certificate to the tax
return on which the credits are to be 
20claimed. The tax credit under this Section may not reduce the 
21taxpayer's liability to less than zero. If the amount of the 
22credit exceeds the tax liability for the year, the excess 
23credit may be carried forward and applied to the tax liability 
24of the 10 taxable years following the first excess credit 
25year. The taxpayer is not eligible to receive credits under 
26this Section and under Section 221 of the Illinois Income Tax 
 
 
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1Act for the same qualified expenditures or qualified 
2rehabilitation plan. 
3 (d) If the taxpayer is (i) a corporation having an 
4election in effect under Subchapter S of the federal Internal 
5Revenue Code, (ii) a partnership, or (iii) a limited liability 
6company, the credit provided under this Act may be claimed by 
7the shareholders of the corporation, the partners of the 
8partnership, or the members of the limited liability company 
9in the same manner as those shareholders, partners, or members 
10account for their proportionate shares of the income or losses 
11of the corporation, partnership, or limited liability company, 
12or as provided in the bylaws or other executed agreement of the 
13corporation, partnership, or limited liability company. 
14Credits granted to a partnership, a limited liability company 
15taxed as a partnership, or other multiple owners of property 
16shall be passed through to the partners, members, or owners 
17respectively on a pro rata basis or pursuant to an executed 
18agreement among the partners, members, or owners documenting 
19any alternate distribution method.
20 (e) If a recapture event occurs during the recapture 
21period with respect to a qualified historic structure, then 
22for any taxable year in which the credits are allowed as 
23specified in this Act, the tax under the applicable Section of 
24this Act shall be increased by applying the recapture 
25percentage set forth below to the tax decrease resulting from 
26the application of credits allowed under this Act to the 
 
 
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1taxable year in question.
2 For the purposes of this subsection, the recapture 
3percentage shall be determined as follows:
4  (1) if the recapture event occurs within the first 
5 year after commencement of the recapture period, then the 
6 recapture percentage is 100%;
7  (2) if the recapture event occurs within the second 
8 year after commencement of the recapture period, then the 
9 recapture percentage is 80%;
10  (3) if the recapture event occurs within the third 
11 year after commencement of the recapture period, then the 
12 recapture percentage is 60%;
13  (4) if the recapture event occurs within the fourth 
14 year after commencement of the recapture period, then the 
15 recapture percentage is 40%; and
16  (5) if the recapture event occurs within the fifth 
17 year after commencement of the recapture period, then the 
18 recapture percentage is 20%.

19 In the case of any recapture event, the carryforwards 
20under this Act shall be adjusted by reason of such event.
21 (f) The Division may adopt rules to implement this Section 
22in addition to the rules expressly authorized herein.

23(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)

24 (35 ILCS 31/20)

25 Sec. 20. Limitations, reporting, and monitoring. 
 
 
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1 (a) In every calendar year that this program is in effect, 
2the Division is authorized to allocate $15,000,000 in tax 
3credits in addition to any unallocated, returned, or rescinded 
4allocations from previous years, pursuant to qualified 
5rehabilitation plans. The Division shall award not more than 
6an aggregate of $15,000,000 in total annual tax credits 
7pursuant to qualified rehabilitation plans for qualified 
8historic structures. The Division shall not allocate or award 
9award not more than $3,000,000 in tax credits with regard to a 
10single qualified rehabilitation plan. In allocating awarding 
11tax credits under this Act, the Division must prioritize 
12applications projects that meet one or more of the following:
13  (1) the qualified historic structure is located in a 
14 county that borders a State with a historic 
15 income-producing property rehabilitation credit;
16  (2) the qualified historic structure was previously 
17 owned by a federal, state, or local governmental entity 
18 for no less than 6 months;
19  (3) the qualified historic structure is located in a 
20 census tract that has a median family income at or below 
21 the State median family income; data from the most recent 
22 5-year estimate from the American Community Survey (ACS), 
23 published by the U.S. Census Bureau, shall be used to 
24 determine eligibility;
25  (4) the qualified rehabilitation plan includes in the 
26 development partnership a Community Development Entity or 
 
 
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1 a low-profit (B Corporation) or not-for-profit 
2 organization, as defined by Section 501(c)(3) of the 
3 Internal Revenue Code; or
4  (5) the qualified historic structure is located in an 
5 area declared under an Emergency Declaration or Major 
6 Disaster Declaration under the federal Robert T. Stafford 
7 Disaster Relief and Emergency Assistance Act. The 
8 declaration must be no older than 3 years at the time of 
9 application. 
10 (b) The annual aggregate authorization program allocation 
11of $15,000,000 set forth in subsection (a) shall be allocated 
12by the Division, in such proportion as determined by the 
13Director Department, on a per calendar basis twice in each 
14calendar year that the program is in effect, provided that: 
15(i) the amount initially allocated by the Division for the 
16first any one calendar application period shall not exceed 65% 
17of the total allowable amount available for allocation. Any 
18unallocated and (ii) any portion of the allocated allowable 
19amount remaining unused as of the end of any of the second 
20calendar application period of a given calendar year shall be 
21rolled over into and added to the total authorized allocated 
22amount for the next available calendar year. The qualified 
23rehabilitation plan must meet a readiness test, as defined in 
24the rules created by the Division, in order for the 
25application Applicant to qualify. In any given application 
26period, applications Applicants that qualify under this Act 
 
 
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1will be prioritized as set forth in subsection (a) and placed 
2in a queue based on the date and time the application is 
3received. Applicants whose applications qualify but do not 
4receive an allocation until such time as the application 
5period total allowable amount is reached. Applicants must 
6reapply to be considered in subsequent for each application 
7periods period.
8 (c) Subject On or before December 31, 2019,
and on or 
9before December 31 of each odd-numbered year thereafter 
10through
2023, subject to appropriation and prior to equal 
11disbursement to the Division, moneys in the Historic Property 
12Administrative Fund shall be used, on a biennial basis, 
13beginning at the end of the second first fiscal year after the 
14effective date of this amendatory Act of the 102nd General 
15Assembly, to hire a qualified third party to prepare a 
16biennial report to assess the overall impact effectiveness of 
17this Act from the qualified rehabilitation plans projects 
18under this Act completed in that year and in previous years. 
19Baseline data of the metrics in the report shall be collected 
20at the initiation of a qualified rehabilitation plan project. 
21The overall economic impact shall include at least:
22  (1) the number of applications, project locations, and 
23 proposed use of qualified historic structures;
24  (2) the amount of credits awarded and the number and 
25 location of projects receiving credit allocations; 
26  (3) the status of ongoing projects and projected 
 
 
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1 qualifying expenditures for ongoing projects;

2  (4) for completed projects, the total amount of 
3 qualifying rehabilitation expenditures and non-qualifying 
4 expenditures, the number of housing units created and the 
5 number of housing units that qualify as affordable, and 
6 the total square footage rehabilitated and developed;
7  (5) direct, indirect, and induced economic impacts;
8  (6) temporary, permanent, and construction jobs 
9 created; and
10  (7) sales, income, and property tax generation before 
11 construction, during construction, and after completion.
12 The report to the General Assembly shall be filed with the 
13Clerk of the House of Representatives and the Secretary of the 
14Senate in electronic form only, in the manner that the Clerk 
15and the Secretary shall direct.
16 (d) Any time prior to issuance of a tax credit 
17certificate, the Director of the Division, the State Historic 
18Preservation Officer, or staff of the Division may, upon 
19reasonable notice to the project owner of not less than 3 
20business days, conduct a site visit to the project to inspect 
21and evaluate the project.
22 (e) Any time prior to the issuance of a tax credit 
23certificate and for a period of 4 years following the 
24effective date of a project tax credit certificate, the 
25Director may, upon reasonable notice of not less than 30 
26calendar days, request a status report from the Applicant 
 
 
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1consisting of information and updates relevant to the status 
2of the project. Status reports shall not be requested more 
3than twice yearly.
4 (f) In order to demonstrate sufficient evidence of 
5reviewable progress within 12 months after the date the 
6Applicant received notification of allocation approval from 
7the Division, the Director may require the Applicant to shall 
8provide all of the following: 
9  (1) a viable financial plan which demonstrates by way 
10 of an executed agreement that all financing has been 
11 secured for the project; such financing shall include, but 
12 not be limited to, equity investment as demonstrated by 
13 letters of commitment from the owner of the property, 
14 investment partners, and equity investors;
15  (2) (blank); final construction drawings or approved 
16 building permits that demonstrate the complete 
17 rehabilitation of the full scope of the application; and
18  (3) all historic approvals, including all federal and 
19 State rehabilitation documents required by the Division. 
20 The Director shall review the submitted evidence and may 
21request additional documentation from the Applicant if 
22necessary. The Applicant will have 30 calendar days to provide 
23the information requested, otherwise the allocation approval 
24may be rescinded at the discretion of the Director.
25 (g) In order to demonstrate sufficient evidence of 
26reviewable progress within 24 18 months after the date the 
 
 
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1application received notification of approval from the 
2Division, the Director may require the Applicant is required 
3to provide detailed evidence that the Applicant has secured 
4and closed on financing for the complete scope of 
5rehabilitation for the project. To demonstrate evidence that 
6the Applicant has secured and closed on financing, the 
7Applicant will need to provide signed and processed loan 
8agreements, bank financing documents or other legal and 
9contractual evidence to demonstrate that adequate financing is 
10available to complete the project. The Director shall review 
11the submitted evidence and may request additional 
12documentation from the Applicant if necessary. The Applicant 
13will have 30 calendar days to provide the information 
14requested, otherwise the allocation approval may be rescinded 
15at the discretion of the Director.
16 If the Applicant fails to document reviewable progress 
17within 24 18 months of approval, the Director may notify the 
18Applicant that the allocation application is rescinded. 
19However, should financing and construction be imminent, the 
20Director may elect to grant the Applicant no more than 5 months 
21to close on financing and commence construction. If the 
22Applicant fails to meet these conditions in the required 
23timeframe, the Director shall notify the Applicant that the 
24application is rescinded. Any such rescinded allocation shall 
25be added to the aggregate amount of credits available for 
26allocation for the year in which the forfeiture occurred.
 
 
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1 The amount of the qualified expenditures identified in the 
2qualified taxpayer's Applicant's certification of completion 
3and reflected on the Historic Preservation Tax Credit 
4certificate issued by the Director is subject to inspection, 
5examination, and audit by the Department of Revenue.
6 The qualified taxpayer Applicant shall establish and 
7maintain for a period of 4 years following the effective date 
8on a project tax credit certificate such records as required 
9by the Director. Such records include, but are not limited to, 
10records documenting project expenditures and compliance with 
11the U.S. Secretary of the Interior's Standards. The Applicant 
12shall make such records available for review and verification 
13by the Director, the State Historic Preservation Officer, the 
14Department of Revenue, or appropriate staff, as well as other 
15appropriate State agencies. In the event the Director 
16determines an Applicant has submitted a status an annual 
17report containing erroneous information or data not supported 
18by records established and maintained under this Act, the 
19Director may, after providing notice, require the Applicant to 
20resubmit corrected reports.

21(Source: P.A. 100-629, eff. 1-1-19.)

22 (35 ILCS 31/25)

23 Sec. 25. Powers. The Division may shall adopt rules for 
24the administration of this Act. The Division may enter into an 
25intergovernmental agreement with the Department of Commerce 
 
 
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1and Economic Opportunity, the Department of Revenue, or both, 
2for the administration of this Act. Such intergovernmental 
3agreement may allow for the distribution of all or a portion of 
4the issuance fee imposed under Section 10 to the Department of 
5Commerce and Economic Opportunity or the Department of 
6Revenue, as applicable.

7(Source: P.A. 100-629, eff. 1-1-19.)

8 Section 10. The Illinois Income Tax Act is amended by 
9changing Section 228 as follows:

10 (35 ILCS 5/228)
11 Sec. 228. Historic preservation credit. For
tax years 
12beginning on or after January 1, 2019 and ending on
or before 
13December 31, 2023, a taxpayer who qualifies for a
credit under 
14the Historic Preservation Tax Credit Act is entitled to a 
15credit against the taxes
imposed under subsections (a) and (b) 
16of Section 201 of this
Act as provided in that Act. If the 
17taxpayer is a partnership,
or Subchapter S corporation, or a 
18limited liability company the credit shall be allowed to the

19partners, or shareholders, or members in accordance with the 
20determination
of income and distributive share of income under 
21Sections 702
and 704 and Subchapter S of the Internal Revenue 
22Code provided that credits granted to a partnership, a limited 
23liability company taxed as a partnership, or other multiple 
24owners of property shall be passed through to the partners, 
 
 
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1members, or owners respectively on a pro rata basis or 
2pursuant to an executed agreement among the partners, members, 
3or owners documenting any alternate distribution method.
If 
4the amount of any tax credit awarded under this Section

5exceeds the qualified taxpayer's income tax liability for the

6year in which the qualified rehabilitation plan was placed in

7service, the excess amount may be carried forward as
provided 
8in the Historic Preservation Tax Credit Act.

9(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)


10 Section 99. Effective date. This Act takes effect upon 
11becoming law.