Florida Senate - 2019 SB 250 By Senator Flores 39-00363A-19 2019250__ 1 A bill to be entitled 2 An act relating to a pilot state workforce housing tax 3 credit; creating s. 220.1855, F.S.; defining terms; 4 providing a credit, within a specified timeframe, 5 against the corporate income tax for certain taxpayers 6 owning interests in eligible workforce housing 7 developments; requiring the Florida Housing Finance 8 Corporation to make agency awards of the credit; 9 specifying requirements for claiming and awarding 10 awards; limiting the amount of awards; providing for 11 the allocation of annual credit amounts among 12 specified parties and requiring certification of such 13 amounts; authorizing recipients of the credit to carry 14 forward a portion of the credit for a specified time 15 period; requiring the corporation to establish 16 procedures to monitor compliance; providing for credit 17 recapture; authorizing the corporation to adopt rules; 18 providing applicability and construction; creating s. 19 420.5096, F.S.; creating the State Workforce Housing 20 Tax Credit Program; providing the purpose of the 21 program; requiring the corporation to administer the 22 program; requiring the corporation to determine which 23 workforce housing developments are eligible for 24 certain tax credits; specifying requirements for the 25 administration of the program; specifying procedures 26 and requirements for taxpayers applying for the 27 program; requiring the executive director of the 28 Department of Revenue to apply credits to tax 29 liability; creating s. 624.51056, F.S.; requiring that 30 state workforce housing tax credits be allowed against 31 the insurance premium tax and retaliatory tax after 32 applying certain deductions and credits; providing 33 applicability; providing construction; providing an 34 effective date. 35 36 Be It Enacted by the Legislature of the State of Florida: 37 38 Section 1. Section 220.1855, Florida Statutes, is created 39 to read: 40 220.1855 State workforce housing tax credit.— 41 (1) DEFINITIONS.—As used in this section, the term: 42 (a) “Agency award” means the allocation of a 10-year stream 43 of state workforce housing tax credits to an eligible workforce 44 housing development by the Florida Housing Finance Corporation 45 pursuant to s. 420.5096. 46 (b) “Annual credit amount” means an amount equal to one 47 tenth of an agency award to an eligible workforce housing 48 development which is claimed by the eligible workforce housing 49 development in each year of the credit period. 50 (c) “Applicable fraction” means a fraction, the numerator 51 of which is the number of workforce housing units in the 52 eligible workforce housing development, and the denominator of 53 which is the number of residential rental units in the eligible 54 workforce housing development. 55 (d) “Compliance period” means the period of 10 calendar 56 years beginning with the first calendar year of the credit 57 period with respect to any building that is, or is part of, an 58 eligible workforce housing development. 59 (e) “Credit period” means, with respect to any building 60 that is, or is part of, an eligible workforce housing 61 development, the period of 10 calendar years beginning with the 62 calendar year in which the last residential building in the 63 eligible workforce housing development is placed in service. 64 (f) “Eligibility statement” means a statement issued by the 65 Florida Housing Finance Corporation which certifies that a 66 development is an eligible workforce housing development and 67 provides: 68 1. The calendar year in which the last residential building 69 in the eligible workforce housing development was placed in 70 service; 71 2. The dollar amount of the agency award under paragraph 72 (2)(d) to the eligible workforce housing development; 73 3. The maximum qualified basis taken into account in 74 determining the dollar amount; 75 4. Sufficient information to identify the eligible 76 workforce housing development and the owner of the eligible 77 workforce housing development; and 78 5. Such other information as the Florida Housing Finance 79 Corporation, in consultation with the director of the 80 department, prescribes by rule. 81 (g) “Eligible basis” of an eligible workforce housing 82 development means the adjusted basis of such eligible workforce 83 housing development as of the close of the first year of the 84 credit period. 85 (h) “Eligible workforce housing development” means a 86 building or group of buildings located in this state in which at 87 least 60 percent of the residential units in the building are 88 rent-restricted and are workforce housing units. 89 (i) “Imputed income limitation applicable to the unit” 90 means the income limitation that would apply to individuals 91 occupying the unit if the number of individuals occupying the 92 unit was: 93 1. In the case of a unit that does not have a separate 94 bedroom, one; or 95 2. In the case of a unit that has one or more separate 96 bedrooms, one and one half for each separate bedroom. 97 (j) “Qualified basis” of an eligible workforce housing 98 development means the eligible basis multiplied by the 99 applicable fraction. 100 (k) “Rent-restricted” means that the gross rent for a 101 residential unit may not exceed 30 percent of the imputed income 102 limitation applicable to the unit. 103 (l) “Workforce housing unit” means a residential unit in an 104 eligible workforce housing development which is affordable to 105 natural persons or families whose total annual household income 106 does not exceed 90 percent of the area median income, adjusted 107 for household size; or does not exceed 110 percent of the area 108 median income, adjusted for household size, in: 109 1. Areas of critical state concern designated under s. 110 380.05, for which the Legislature has declared its intent to 111 provide affordable housing; and 112 2. Areas that were designated as areas of critical state 113 concern for at least 20 consecutive years before removal of the 114 designation. 115 (2) AUTHORIZATION TO GRANT STATE WORKFORCE HOUSING TAX 116 CREDITS; LIMITATIONS.— 117 (a) A taxpayer owning an interest in one or more eligible 118 workforce housing developments may claim a tax credit against 119 any tax due under this chapter if the owner of the eligible 120 workforce housing development receives an agency award. The tax 121 credits awarded pursuant to the agency award must be claimed in 122 each year of the credit period in amounts equal to the annual 123 credit amount unless carried forward pursuant to paragraph (g). 124 The amount of the agency award and each annual credit amount 125 must be stated on the eligibility statement. 126 (b) Except as provided in paragraphs (c) and (d), the 127 agency award under paragraph (a) may not exceed 9 percent of the 128 qualified basis of each eligible workforce housing development. 129 (c) The Florida Housing Finance Corporation shall make 130 agency awards in calendar year 2020, calendar year 2021, or 131 calendar year 2022 as set forth in this paragraph. An agency 132 award may not be made after 2022. The maximum aggregate dollar 133 amount of agency awards to eligible workforce housing 134 developments under this section, combined with the credit under 135 s. 624.50156, is $50 million in 2020, $50 million in 2021, and 136 $50 million in 2022. The limitation in this paragraph on agency 137 awards does not apply to the annual credit amount claimed with 138 respect to an eligible workforce housing development for each 139 year of the credit period. 140 (d) The dollar amount of the agency award to any eligible 141 workforce housing development may not exceed the amount that the 142 Florida Housing Finance Corporation determines is necessary for 143 the eligible workforce housing development’s financial 144 feasibility and its viability as an eligible workforce housing 145 development throughout the credit period. In determining the 146 agency award to any eligible workforce housing development, the 147 Florida Housing Finance Corporation shall specify the maximum 148 qualified basis that may be taken into account under this 149 section with respect to that eligible workforce housing 150 development. The maximum qualified basis with respect to an 151 eligible workforce housing development may not exceed the 152 amounts determined in paragraph (1)(f). 153 (e) A tax credit in the amount of the annual credit amount 154 is not allowed for any year with respect to an eligible 155 workforce housing development unless an extended workforce 156 housing commitment is in effect as of the end of the calendar 157 year. As used in this paragraph, the term “extended workforce 158 housing commitment” means an agreement between the taxpayer and 159 the Florida Housing Finance Corporation which is substantially 160 similar to the agreement specified in 26 U.S.C. s. 42(h)(6)(B). 161 (f) If an owner of an eligible workforce housing 162 development which receives an agency award is a partnership, 163 limited liability company, S corporation, or similar pass 164 through entity, the owner may allocate the annual credit amount 165 among its partners, shareholders, members, or other constituent 166 taxpayers in any manner agreed to by such partners, 167 shareholders, members, or other constituent taxpayers. Each year 168 of the credit period, the owner shall certify to the Florida 169 Housing Finance Corporation the portion of the annual credit 170 amount allocated to each partner, shareholder, member, or other 171 constituent taxpayer. Each partner, shareholder, member, or 172 other constituent taxpayer is allowed to claim such portion of 173 the annual credit amount subject to the restrictions in this 174 section. 175 (g) Any amount of credit which exceeds the tax due for any 176 year may be carried forward as a tax credit against subsequent 177 years’ income tax liability for up to 11 tax years after the 178 year in which the annual credit amount was made pursuant to 179 paragraph (a). Such credit must be applied first to the earliest 180 years possible. Any amount of the credit which is not used may 181 not be refunded to the taxpayer. 182 (3) PROJECT MONITORING.—The Florida Housing Finance 183 Corporation shall establish such procedures as it deems 184 necessary for monitoring an eligible workforce housing 185 development’s compliance with this section and for notifying the 186 director of the department of any noncompliance of which it 187 becomes aware. 188 (4) CREDIT RECAPTURE.—As of the close of any year in the 189 compliance period, if the amount of the qualified basis of any 190 building with respect to the taxpayer is less than the amount of 191 the qualified basis as of the close of the preceding year, the 192 credit allowable with respect to such year must be 193 proportionately reduced by the percentage reduction in the 194 qualified basis. If credit in excess of this reduced amount has 195 been claimed by any taxpayer with respect to such year, the 196 taxpayer’s tax must be increased by the amount of any credit 197 wrongfully claimed. Such adjustment must be made in the year in 198 which the reduction in qualified basis is identified. 199 (5) RULES; APPLICABILITY OF FEDERAL LAW; CONSTRUCTION.— 200 (a) The Florida Housing Finance Corporation shall adopt 201 rules necessary to administer this section. 202 (b) Section 42 of the Internal Revenue Code applies to the 203 credit awarded under this section. However, to the extent that 204 section is inconsistent with this section, this section 205 controls. 206 Section 2. Section 420.5096, Florida Statutes, is created 207 to read: 208 420.5096 State Workforce Housing Tax Credit Program.— 209 (1) The State Workforce Housing Tax Credit Program is 210 created for the purpose of stimulating creative private sector 211 initiatives to increase the supply of workforce housing in the 212 state. The Florida Housing Finance Corporation shall administer 213 the program. 214 (2) The Florida Housing Finance Corporation shall determine 215 which workforce housing developments are eligible for the 216 corporate tax credit available under s. 220.1855 or the 217 insurance premium tax credit available under s. 624.51056, or 218 both. The corporation may exercise all powers necessary to 219 administer the awarding of an agency award, as defined in s. 220 220.1855(1), and the distribution of the tax credits. The 221 corporation shall ensure that at least 50 percent of annual 222 credits under this section are awarded to projects that will 223 produce workforce housing units affordable to natural persons or 224 families whose total annual household income exceeds 60 percent 225 of the area median income. The board of directors of the 226 corporation shall administer the procedures for agency awards 227 and determine agency awards on behalf of the corporation. The 228 corporation shall prepare an annual plan containing general 229 guidelines for agency awards to eligible workforce housing 230 developments. 231 (3) The corporation shall adopt procedures for agency 232 awards consistent with s. 220.1855 and this section which will 233 ensure the maximum use of available tax credits to encourage 234 development of workforce housing, taking into consideration the 235 timeliness of the application, the location of the proposed 236 project, the relative need and the availability of such housing, 237 the economic feasibility of the project, and the ability of the 238 applicant to complete the project in the calendar year for which 239 the credit is sought. To the extent permitted under 42 U.S.C. 240 ss. 3601-3619 and regulations promulgated thereunder, the 241 corporation shall ensure that projects awarded credits under 242 this section set aside at least 30 percent of their units to be 243 rented by families with essential services personnel as defined 244 in s. 420.5095(3). 245 (4) The corporation may not grant an agency award to an 246 eligible workforce housing development unless the applicant 247 demonstrates to the satisfaction of the corporation that for 248 every $1 in tax credits granted to the applicant, this state 249 will benefit at least $1 in total development costs with respect 250 to the rent-restricted units within such eligible workforce 251 housing development. 252 (5)(a) A taxpayer wishing to participate in the State 253 Workforce Housing Tax Credit Program must submit to the 254 corporation an application for the agency award of tax credit. 255 The application must identify the proposed workforce housing 256 development and its location and must include evidence that the 257 proposed development is an eligible workforce housing 258 development as defined in s. 220.1855(1). The corporation may 259 request any information from an applicant which is necessary to 260 allow the corporation to make an agency award under the 261 guidelines under subsection (3). 262 (b) The corporation’s award of an agency award to an 263 eligible workforce housing development must be in writing and 264 must include a statement of the maximum credit allowable to the 265 applicant. 266 (c) The corporation shall establish procedures for the 267 owner of an eligible workforce housing development to provide a 268 cost certification demonstrating that the agency award does not 269 exceed 9 percent of the qualified basis of the eligible 270 workforce housing development. Once such cost certification is 271 accepted and approved by the corporation, the corporation shall 272 issue to the owner of the eligible workforce housing development 273 an eligibility statement, as defined in s. 220.1855(1). A copy 274 of the eligibility statement must be transmitted to the 275 executive director of the Department of Revenue, who shall apply 276 the annual credit amount to the tax liability of the owner of 277 the eligible workforce housing development or its constituent 278 taxpayers as specified in s. 220.1855(2)(g). 279 Section 3. Section 624.51056, Florida Statutes, is created 280 to read: 281 624.51056 State workforce housing tax credit.— 282 (1) The tax credit authorized by s. 220.1855 also must be 283 allowed against any tax due under s. 624.509(1) or s. 624.5091 284 after deducting from the tax the deductions for assessments made 285 pursuant to s. 440.51; the credits for taxes paid under ss. 286 175.101 and 185.08; the credits for income taxes paid under 287 chapter 220; the credit allowed under s. 624.509(5), as such 288 credit is limited by s. 624.509(6); and the credit allowed under 289 s. 624.51055. 290 (2) All requirements of the tax credit under s. 220.1855 291 apply to insurers claiming a tax credit under this section. 292 (3) An insurer claiming a credit against premium tax 293 liability under this section is not required to pay any 294 additional retaliatory tax levied pursuant to s. 624.5091 as a 295 result of claiming such credit, and that section does not limit 296 such credit. 297 Section 4. This act shall take effect July 1, 2019.