SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 34
As Amended by House Committee on Financial
Institutions and Pensions

Brief*
SB 34, as amended, would create the Kansas Urban
Housing Incentive District Act to allow for the designation of
and criteria for an Urban Housing Incentive District (UHID) in
certain cities with a population of 60,000 or more; would
amend the Kansas Rural Housing Incentive District (RHID)
Act to expand the list of costs that may be paid for by
proceeds of special obligation bonds; and would amend the
Kansas Housing Investor Tax Credit Act (HITCA) to expand
the transferability of tax credits issued under that act.
The bill would be in effect upon publication in the
Kansas Register.

Kansas Urban Housing Incentive District Act
The bill would designate the law created in the section
pertaining to UHIDs as the Kansas Urban Housing Incentive
District Act and would specify UHIDs would be generally
subject to the provisions of the Kansas Rural Housing
Incentive District Act (KSA 12-5244 through KSA 12-5252).
Under the bill, any city establishing an UHID would not
be able to, within the district:
● Designate more than 100 units as for-sale units in
one year;
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
 ● Designate more than 100 units as for-rent units in
one year;
● Designate more than 50 units associated with a
single project as for-sale units within one year; or
● Designate more than 50 units associated with a
single project as for-rent units within one year.
For-sale units not sold within six months after the
certificate of occupancy is granted would be eligible to be
redesignated as for-rent units. The bill also provides that the
governing body would be able to designate for-sale and for-
rent units for succeeding years as part of a proposed multi-
phased, multi-year development plan.
The bill would require the average size of each
residence constructed within an UHID to be no larger than
1,650 square feet, excluding any garage or other exterior
area, such as a porch, patio, or unattached storage building.

Kansas Rural Housing Incentive District Act
The bill would amend the Kansas RHID Act to expand
the list of costs that may be paid for by proceeds of special
obligation bonds, adding renovation or construction of
residential dwellings, multi-family units, or buildings or other
structures exclusively for residential use located on existing
lots if either:
● The infrastructure, including streets, sewer, water,
and utilities, has been in existence for at least ten
years; or
● The lots on which the residential units are located
have been subject to an improvement district tax
assessment because the land is located in an
improvement district already established by a city
or county.

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 [Note: The city of Topeka is currently designated as a
city for purposes of the Kansas Rural Housing Incentive
District Act. A “city” as defined in the Kansas Urban Housing
Incentive District Act would be any city with a population of
60,000 or more, as certified by the Secretary of State to the
Director of the Budget, except for the city of Topeka.]

Kansas Housing Incentive Tax Credit Act
The bill would amend the HITCA to expand the
transferability of tax credits issued under this act. Among
changes addressing transferees, the bill would require
transferees to provide information and documentation to
claim the tax credit in the form and manner required by the
Secretary of Revenue (qualified investors, project builders,
and developers are subject to this requirement under current
law).
Regarding claiming of a tax credit, the bill would also
specify:
● Any portion of the tax credit that is carried forward
could be transferred to another taxpayer;
● All or a portion of the tax credit could be transferred
by the qualified investor or any subsequent
transferees to one or more persons; and
● There will be no limit on the number of times a
credit or any portion of a credit can be transferred.
The bill would also remove a limitation that specified
only the full amount of the tax credit for any one investment
may be transferred and may be transferred only one time.
The bill would clarify that the transferee would receive all
remaining rights and restrictions for the tax credit being
transferred on the date of the transfer.

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 The bill would also provide for the calculation of any tax
due under provisions in the Insurance Code pertaining to
retaliatory taxes (taxes imposed on out-of-state insurance
companies); the tax credit would be treated as a tax paid as
part of the insurance company’s premium tax owed.
[Note: Under the HITCA, for tax years 2022 and
thereafter, a tax credit could be claimed against Kansas
income tax liability, the privilege tax liability imposed upon
certain financial institutions, and the premium tax liability
imposed upon insurance companies. The tax credit could be
claimed by qualified investors and project builders or
developers of a qualified housing project.]

Background
The bill as amended by House Committee, combines
provisions of SB 34 and SB 37.

SB 34 (Kansas Rural Housing Incentive District Act)
SB 34 was introduced in the Senate Committee on
Financial Institutions and Insurance at the request of Senator
Olson.
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, proponent testimony
was provided by Senator Olson; representatives of Heartland
Housing Partners, the League of Kansas Municipalities, and
the Kansas Association of Realtors; and a representative of
Kansas Corn Growers Association, Kansas Farm Bureau,
Northwest Kansas Economic Innovation Center, and
Sunflower Electric Power Corporation. Proponents generally
stated the bill would help address ongoing shortages of
affordable housing, and this bill would provide another tool for
cities to as they look for housing solutions.

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 Written-only proponent testimony was provided by
representatives of The Chamber of Lawrence, Kansas; the
city of Lawrence; the city of Overland Park; Haag
Development Company; Kansas Bankers Association;
Kansas Department of Commerce; Kansas Manufactured
Housing Association; METL (Manhattan, Emporia, Topeka,
and Lawrence Chambers of Commerce); Overland Park
Chamber of Commerce; Sugar Creek Capital; and United
Community Services of Johnson County, Inc.
No other testimony was provided.
House Committee on Financial Institutions and Pensions
In the House Committee joint hearing on SB 34 and SB
37, proponents generally addressed efforts and incentives to
create affordable and attainable housing statewide.
Proponents included proponents of SB 34 and SB 37
appearing before the Senate Committee. Proponents
speaking specifically to SB 34 addressed the addition of
vertical construction as an eligible expense, the potential to
increase infill housing development on existing lots, and
support for larger cities creating affordable housing
developments. Proponents addressing SB 37 highlighted the
shortage of attainable housing, which serves as a barrier to
economic growth and development for any community, rural
or urban.
Neutral written-only testimony was provided by the
Kansas Housing Resources Corporation (KHRC) regarding
SB 37.
The House Committee amended the bill to:
● Create and separately codify provisions pertaining
to UHIDs;
● Define the term “city” as it relates to the
designation of UHIDs;

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 ● Update the effective date to be upon publication in
the Kansas Register; and
● Add provisions expanding the transferability of
certain tax credits under the HITCA (SB 37, as
amended by Senate Committee).
SB 37 (Kansas Housing Investor Tax Credit Act)
The bill was introduced by the Senate Committee on
Federal and State Affairs at the request of Senator Olson.
The bill was referred to the Senate Committee on Financial
Institutions and Insurance.
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, proponent testimony
was provided by Senator Olson and representatives of the
American Property Casualty Insurance Association (APCIA);
Heartland Housing Partners; and Kansas Farm Bureau,
Kansas Corn Growers Association, Sunflower Electric Power
Corporation, and the Northwest Kansas Economic Innovation
Center (termed “Coalition” in testimony). Proponents
indicated the bill would remove a restriction in the Act to allow
investors to sell more than one tax credit at a time. An
example provided indicated an investor would be permitted to
sell the tax credit to a banking trust department that could
then, in turn, resell or transfer the benefits of the original tax
credit to a banking client or other beneficiary. The APCIA
representative requested consideration of an amendment
regarding premium tax credit treatment for out-of-state
insurance companies to provide retaliatory protections to
these companies.
Written-only proponent testimony was submitted by
representatives of the Kansas Department of Commerce,
Haag Development Company, the Kansas Association of
Realtors, Kansas Bankers Association, and Sugar Creek
Capital.
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 Neutral testimony provided by a representative of the
KHRC indicated the allowance of unlimited transfers and
transfers of only a portion of the tax credits allocated to an
investor would likely lead to more administrative work for the
KHRC. The representative stated a limit to the number of
transfers could alleviate this administrative burden while
supporting the goals of the legislation.
Written-only opponent testimony was submitted by a
representative of Americans for Prosperity Kansas. The
testimony stated a concern for the limitation of the tax credit
to only those making investments in qualified housing
projects.
The Senate Committee amended the bill to address the
retaliatory tax consideration of taxes paid by certain
insurance companies.

Fiscal Information

SB 34 (Kansas Rural Housing Incentive District Act)
According to the fiscal note prepared by the Division of
the Budget on the bill as introduced, the Kansas
Development Finance Authority indicates the bill could reduce
state tax revenues as the tax increment revenues would be
pledged to pay debt service on bonds. The agency also
indicates local governments could experience an increase in
debt liabilities.
The Kansas Department of Revenue indicates, because
revenues under the bill would come from future real property
developments, the agency is unable to estimate what the
fiscal effect would be.
The League of Kansas Municipalities indicates the bill
could increase revenue to the cities because of the increased

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property taxes and sales taxes from the construction projects
and renovations of property detailed by the bill.
The Kansas Department of Commerce and the Kansas
Association of Counties indicate the bill would not have a
fiscal effect. Any fiscal effect associated with enactment of the
bill is not reflected in The FY 2024 Governor’s Budget Report.

SB 37 (Kansas Housing Investor Tax Credit Act)
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Kansas Department
of Revenue indicates the bill would affect State General Fund
(SGF) revenue. The bill would allow the Kansas Housing
Investor Tax Credit to be transferred to multiple taxpayers;
however, the total amount of these credits would continue to
be capped at $13.0 million per tax year.
The Department indicates enactment of the bill would
require $42,780 from the SGF in FY 2024 to implement the
bill and for additional information technology expenditures. In
addition, if the combined effect of implementing this bill and
other enacted legislation exceeds the Department’s
programming resources, or if the time for implementing the
changes is too short, additional expenditures for outside
contract programmer services beyond the Department’s
current budget may be required.
A fiscal note was not immediately available regarding
the effect of the inclusion of certain premium taxes paid in
consideration of taxes owed by insurance companies.
Any fiscal effect associated with SB 37 is not reflected in
The FY 2024 Governor’s Budget Report.
Housing; economic development; Kansas Rural Housing Incentive District Act;
Kansas Urban Housing Incentive District Act; Kansas Investor Tax Credit Act;
transferability of credits; retaliatory taxes


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Statutes affected:
As introduced: 12-5241, 12-5242, 12-5249
As Amended by House Committee: 11-201, 12-5241, 12-5242, 12-5249, 79-32, 40-252